City of Gonzales
FINANCE DEPARTMENT
STAFF REPORT
TO: Honorable Mayor Rios and City Council
DATE: June 20, 2023
FROM: Mike Howard, Finance Director
THROUGH: Carmen Gil, Acting City Manager
SUBJECT: FY 2023-2024 City and Successor Agency Budget
RECOMMENDATION
It is recommended that your Council and Successor Agency Board:
• Consider and Adopt Resolution No. 2023-39, A Resolution of the City Council of the City of Gonzales Adopting an Operating Budget for the City for the Fiscal Year July 1, 2023, through June 30, 2024, providing for the Appropriations and Expenditures of All Sums Set Forth Therein; • Consider and Adopt Resolution SA-2023-02, A Resolution of the City Council of the City of Gonzales Acting as Successor Agency for the Gonzales Redevelopment Agency Approving and Adopting a Successor Agency Budget for the Period Between July 1, 2023, and June 30, 2024; • Included in the 2023-2024 Recommended Budget; Approve the Position Allocation and the Salary Schedule of the City Classification and Compensation Plan; • As Included in the 2023-2024 Recommended Budget, Affirm the City’s Reserve (Fund) Balances for all Funds;
• Authorize the City Manager and Finance Director to Realign the Budget for Fiscal Year 2022- 2023 to Reflect the Actual Revenues and Expenditures for the 2022-2023 Fiscal Year; and • If needed, direct staff to make changes as necessary and schedule adoption of the Recommended Budget for the City and Successor Agency on June 20, 2023, at 5:00pm.
BACKGROUND
The annual adoption of the City Budget before the end of the fiscal year (June 30), is a very important step and required by the State Budget Act to establish the fiscal road map for the new fiscal year, which begins July 1st. The budget not only conveys to everyone the spending priorities of the City and fiscal plan, but at its most basic level, it allows the City to continue to operate after July 1st of every year.
AGENDA
ITEM
6 To streamline the process, included in the Recommended Budget are the FY 2022-2023 Year-End Estimates. In previous years, this has been provided in a separate report.
REVIEW AND ANALYSIS
The Recommended City and Successor Agency Budget for FY 2023-2024 is balanced and maintains Council priority. As is mentioned in the FY 2023-2024 Budget Message, the Recommended Budget sets forth total Budget Requirements in the amount of $28.6 million, which is $12.8 million lower than the FY 2022-2023 amount. The main reason for the change is the net result of (a) the Community Center Complex Project, (b) the wastewater expansion and rehabilitation project, (c) an increase in personnel costs in the Fire Department, (d) increases in workers’ compensation and liability insurance costs, and (e) funding for the first full year of recently approved cost-of-living-adjustments for all employees.
Of the overall budget amount, the General Fund appropriations total $6,659,121 million, which is $587,224 or 8.1% lower than the FY 2022-2023 Budget amount of $7,246,345. The change is being driven primarily by the Community Center Complex Project, increase in insurance costs, the recently approved cost-of-living-adjustments for all employees, and the increase in the three fulltime Firefighter positions approved for the Fire Department, removal of General Fund Capital Projects and Measure K supporting more recreation operating costs.
Overall, revenues are $28.4 million; of that, the General Fund is $7,187,541, which is $539,512 or 8.1% higher than FY 2022-2023. The main reason for the change is the increase in the property tax and sales tax revenues.
While the FY 2023-2024 is balanced, it will require cost containment throughout the fiscal year. The City will need to also look for new revenue sources to support the ongoing staffing and services currently provided.
The Recommended Budget also reflects resources to finish the Supplemental Environmental Impact Report (EIR) and fiscal plan needed for the next growth phase for the City. Once completed, the EIR and fiscal plan will be used to help complete and inform the application to the Local Agency Formation Commission (LAFCO) to annex up to 1,300 acres into the City.
On the capital infrastructure side, the Recommended Budget reflects funds to begin construction of the Wastewater Treatment Facility expansion and rehabilitation project and finish the design and begin the construction phase of the Community Center Complex project.
The Recommended Budget also maintains a great emphasis in the City’s youth initiatives and programs and reflects utilizing the second payment of American Rescue Plan Act (ARPA) to fund extending the TMobile Hotspot program and other allowable expenses.
Even though the General Fund does not contemplate the use of Fund Balance, as your Council reviews the budget document, please keep in mind that any increases in expenditures or funding new programs and/or initiatives should be done cautiously because they will need to be taken from another section of the budget. This approach is recommended, because it is important to preserve our General Reserve and Fund Balance amount.
NOTE: Please refer to the FY 2023-2024 City and Successor Agency Recommended Budget document for a more detail look at the City’s Budget.
In addition, while included in the Recommended Budget, the recommended actions call out (a) approving the Position Allocations and the Salary Schedule of the City Classification and Compensation Plan and (b) affirming the City’s Reserve (Fund) Balances for all funds.
FY 2022-2023 Year End Projections
To streamline the process this year the FY 2022-2023 Year-End Projections are included as part of this action. Based on projected expenditures and revenues, the year-end General Reserve Fund Balance is estimated to finish at $627,348.
Changes reflected in the:
General Fund include;
1. Maintaining the “Status Quo” with an emphasis on cost containment and revenue growth.
Other Funds include;
1. Changes in both the Water and Sewer Enterprise Funds driven by actual and expected activity.
Explain Recommendation and How it Supports the Vision
Gonzales will continue to be a safe, clean, family-friendly community, diverse in its heritage, and committed to working collaboratively to preserve and retain its small-town charm.
Explain: Obtaining approval and/or policy direction on the Recommended Budget, is important because it allows staff to obtain the necessary policy direction to maintain a healthy financial position for the City and continue the work on a sustainable long-term budget. A sustainable long-term budget is important because it assures the financial health of the City is maintained, which is necessary to assure a safe, clean, and family friendly community.
Explain how the Recommendation Directly Implements the Mission The City Council and Staff of the City of Gonzales will realize our Vision by providing the leadership, commitment, and resources necessary to provide excellent services that enhance the quality of life of our diverse community. X Yes ___No ___ NA
Explain: Please see Vision above.
Strong fiscal policies allow us to provide appropriate infrastructure for:
• Public Safety X Yes No N/A
• Housing X Yes No N/A
• Recreation X Yes No N/A
• Environment X Yes No N/A
• Education X Yes No N/A
Explain: Please see explanation above.
ALTERNATIVES
Alternatives include directing staff to modify and/or change the FY 2023-2024 Recommended City and/or Successor Agency Budget.
BUDGET IMPACT
Please refer to the FY 2023-2024 Recommended City and Successor Agency Budget. In addition, based on the direction received from Council, the budget impacts may change, and will ultimately be reflected in the approved budget.
CONCLUSION
I would like to take this opportunity to express my appreciation to all City staff and Michael Rodriguez (City Attorney), whose dedicated service, cooperation, and commitment to excellent Public Service “Gonzales Way” make all the programs, initiatives, and services funded in the FY 2023-2024 Recommended Budget a possibility. In particular, I would like to acknowledge and thank Mrs. Mary Villegas for her amazing work on this document.
It is recommended that your Council and Successor Agency Board:
• Consider and Adopt the Resolution No. 2023-39, A Resolution of the City Council of the City of Gonzales Adopting an Operating Budget for the City for the Fiscal Year July 1, 2023, through June 30, 2024, and providing for the Appropriations and Expenditures of All Sums Set Forth Therein;
• Consider and Adopt the Resolution SA-2023-02, A Resolution of the City Council of the City of Gonzales Acting as Successor Agency for the Gonzales Redevelopment Agency Approving and Adopting a Successor Agency Budget for the Period Between July 1, 2023, and June 30, 2024; • Included in the 2023-2024 Recommended Budget; Approve the Position Allocation and the Salary Schedule of the City Classification and Compensation Plan; • As Included in the 2023-2024 Recommended Budget, Affirm the City’s Reserve (Fund) Balances for all Funds;
• Authorize the City Manager and Finance Director to Realign the Budget for Fiscal Year 2022- 2023 to Reflect the Actual Revenues and Expenditures for the 2022-2023 Fiscal Year; and • If needed, direct staff to make changes as necessary and schedule adoption of the Recommended Budget for the City and Successor Agency on June 20, 2023, at 5:00pm.
Attachments:
1. Resol 23-39 Adopting FY 23-24 Budget
2. Resol SA-2023-02 Adopting FY 23-24 Budget
3. FY 23-24 Budget